Ringgit down amid rising US yields, uncertainty over rate cuts

 

KUALA LUMPUR: 

The ringgit closed slightly lower against the US dollar, as the sharp increase in US Treasury yields stoked caution among traders and markets regarding the likelihood of future US rate cuts.

Bank Muamalat Malaysia Bhd chief economist Afzanizam Abdul Rashid said the US Federal Reserve (Fed) might be inclined to take a more measured approach to ease its monetary policy stance in view of the healthy labour market.

In addition, the ringgit’s overbought condition from the technical standpoint suggests that technical correction would persist in the near term,

 he told Bernama.

Meanwhile, Kenanga Investment Bank Bhd has revised its year-end forecast for the ringgit versus the US dollar to RM4.25 from RM4.42 previously, premised on Malaysia’s favourable yield differentials, the Fed’s interest rate cuts, and China’s economic recovery.

“As anticipated, the market has adjusted its expectations, now only pricing in two 25-basis point cuts by the Fed this year following stronger-than-expected US September labour data.

While domestic fundamentals should continue to underpin the ringgit, we remain vigilant of external risks, particularly the prospect of a sharper US economic downturn, election-related uncertainties, and geopolitical tensions,

 the investment bank said.

At 6pm, the local note stood at 4.2850/4.2895 versus the greenback compared to yesterday’s close of 4.2810/4.2880.

At the close, the ringgit traded lower against major currencies.

It fell versus the euro to 4.7079/4.7129 from yesterday’s close of 4.6920/4.6996, decreased against the Japanese yen to 2.8988/2.9022 from 2.8857/2.8909 previously, and edged down vis-a-vis the British pound to 5.6108/5.6167 from 5.5953/5.6044.

The local currency performed mixed versus Asean currencies.

The ringgit was marginally higher against the Thai baht to 12.7933/12.8129 from 12.7948/12.8218 yesterday and rose vis-a-vis the Philippine peso to 7.53/7.54 from 7.54/7.55 previously.

However, it slipped versus the Singapore dollar to 3.2876/3.2913 from 3.2832/3.2888 at yesterday’s close and weakened against the Indonesian rupiah to 273.6/274.1 from 272.8/273.4. - FMT